Sears Bankruptcy: How is it happened?

          Most of shoppers knew about Sears bankruptcy since last three months of 2018. It used to be US retail staple since 1886 and a go-to shopping place for the shoppers. However, in the past few decades, Sears's downfall started happening due to the defective marketing strategy plans that the company had made, which led to the bankruptcy last year. There are some reasons that make Sears from the king of retail to become bankrupt, listed by people who used to be a part of Sears.

Sears had variety products from tools and appliance to apparel and home decor

       

          In 1980s, Sears jumped into the "socks and stocks" field. Sears at that time was "the most trusted retailer, the first credit card that most Americans could get", Frank DeSantis said. Although being a part of financial service, it did not still bring as much revenues as they expected. The reason of this is that Sears's central clients are the middle class or lower, who do not have that much money to buy stocks. Additionally, Sears gets distracted away from the retail business, which is still their main goal. They are no longer focused on investing the stores. The stores were not repainted often, the parking lots with the potholes did not bother Sears's executives at all, etc. They do not want to waste the budget but expecting it to be grown, which was quite impossible. Also, they were eventually arrogant and ignore their rivals because they think nobody could be Sears's competitors at that time. According to Lynn Walsh, she "remember listening to the senior executives in the room conclude, ‘Walmart can’t touch us.'" This is a major mistake for a business company.

         Sears is very ambitious. After getting involved in stocks, they now want to make Sears become an apparel store because most of Sears's stores are located in the mall. They believe that appliances are bought in at least 10 years, not the everyday purchase. Therefore, they introduce the new "Softer side of Sears" in 1993. This campaign actually boosts the revenue, but unfortunately, it does not last long and starts declining. Other fashion brands such as Saks Fifth Avenue, the products will be in stock with the limited amount. This will courage the customers to buy it because the item can be gone next time.

Items are always full in stock

Unlikely, Sears always have products stocked on rack with the huge quantities. There is no incentive to buy it today at regular price because next day it always go on sale. When they are busy trying to sale those discount items, their rivals are already updated the latest fashion and Sears won't be able to that. The failure of the apparel department is another strike to Sears's management team. 

Eddie Lampert, left, and Alan Lacy announce the merger of Kmart and Sears in November 2004.  

        The main reason that makes Sears fall down, according to former employees, is Eddie Lampert becoming the CEO 2005. He is in charge from 2005 but does not help to improve the situation nor getting worse, even though he invests more in technology to support the company. He focuses on maximizing cash flow in order to buy back more stock. However, he forgets the core business of Sears, which is a retailer and everything is for customers. 

         Sears has been trying to save itself from bankruptcy. Sadly, it comes to an end. Sears would be ahead of the online shopping game as Amazon if they do not miss their opportunities. Would they be able to go back on business? Time might give them the answer.

  

Source: https://www.wsj.com/articles/how-sears-lost-the-american-shopper-11552647601?mod=searchresults&page=1&pos=18&mod=article_inline by Suzanne Kapner